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Car loan tips to consider

When buying a new or used car one of the main points to consider is not the make, model or colour of vehicle but how you are going to pay for the purchase. Few individuals are lucky enough to be able to pay cash for the purchase and so have to take out some kind of loan or other method of finance. To help you on your search for the most suitable option for your needs here are some car loan tips to consider.

When buying a new or used car one of the main points to consider is not the make, model or colour of vehicle but how you are going to pay for the purchase. Few individuals are lucky enough to be able to pay cash for the purchase and so have to take out some kind of loan or other method of finance. To help you on your search for the most suitable option for your needs here are some car loan tips to consider.


The first of many car loan tips you could give some thought to is what state your credit file is in. If you have an excellent credit rating then you will have more options and could be able to get far cheaper interest rates and a better deal for your loan. However all is not lost if your credit rating is poor, you could still get credit even if you had to pay a slighter higher rate or get a bad credit loan. Therefore check out your own credit file before you apply for loans so that you know where you stand. For instance it might not be wise to choose an unsecured loan if your credit rating is in a bad state as the chances of being approved could be denied. By checking your own rating you would know exactly what lenders will know.


You could weigh up both HP and personal loans. With HP you would pay a deposit on the vehicle and then buy the car over a period of time. As you have paid a deposit the monthly instalments could work out cheaper than with a personal loan, however you would not own the vehicle until the last payment was made on the loan. You would not be able to trade in the car or sell it until this last payment was made.


With an unsecured personal loan you would own the vehicle from the start and could sell it at anytime you wanted as long as you continued paying the loan or paid it off. The rates of interest could be higher than those of a secured loan and you would not be able to borrow as much or spread out the repayments as you could with a secured loan. However the downside to choosing a secured loan over the unsecured is that you would have to secure something against the amount borrowed which could be your car or your home.


Another of the car loan tips to consider if you are considering taking a personal loan is that you would have money in the bank and could use this as a bargaining tool in the showroom. As you are paying cash very often dealers in the showroom will be willing to knock a little off the sticker price on the vehicle.

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Back to May 2009

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